The cost of sickness and disability benefits in the United Kingdom is projected to surpass £100 billion annually by the end of the decade, according to the Office for Budget Responsibility (OBR). This rise forms part of a broader increase in total welfare spending, which the fiscal watchdog forecasts will grow from £333.8 billion last year to £431.3 billion by 2030-31, an increase of £8 billion since its March projections. Nearly half of the total welfare expenditure is attributed to pensioners.

Health-related benefits—including sickness benefits and Personal Independence Payments (PIP)—are expected to reach £105 billion by the 2028-29 financial year. Approximately 75% of these payments are anticipated to go to working-age adults. PIP, a non-means-tested benefit, supports individuals facing additional costs due to disability, while sickness benefits include payments through Universal Credit, the government’s primary out-of-work aid.

Chancellor John Healey announced in his first budget speech that comprehensive welfare reforms would be deferred until 2027. He indicated that the government would await the findings of two major reviews: one led by Alan Milburn on youth unemployment, set to report next month, and another assessing PIP, helmed by Disability Minister Sir Stephen Timms, expected in November. The youth unemployment inquiry is aimed at addressing the issue of nearly one million young people aged 16 to 24 not engaged in work, education, or training (NEET).

The PIP budget has seen a substantial increase, rising from £11 billion in 2019-20 to £28.5 billion in 2025-26, with a forecast to exceed £41 billion by 2030. Recent analysis has highlighted that PIP expenditures for teenagers with autism, ADHD, and depression alone now exceed £1 billion annually.

The government also confirmed benefit payment increases effective next April: PIP and child benefit will rise by 3.5%, while the Universal Credit standard allowance for single individuals over 25 will increase by 4.3% to £102.28 per week.

Joe Shalam, policy director at the Centre for Social Justice, criticized the budget’s approach. He described it as a temporary measure that postpones addressing the welfare system’s deeper challenges. Shalam pointed to a rising number of out-of-work benefit claimants—6.7 million people—while taxpayers face higher taxes amid a growing welfare bill.

In the House of Commons, Healey rejected comparisons to previous administrations, stating his commitment to supporting young people and disabled individuals and to reducing long-term welfare costs. He pledged that the government’s response to the upcoming reviews would be published by the end of the year, followed by a legislative white paper early next year.

Timms’s review was established after a rebellion among Labour backbenchers last summer, which halted planned £5 billion cuts to disability benefits. However, its mandate requires it to work within existing spending forecasts, leading to concerns that proposed reforms may struggle to achieve significant savings.

The OBR heightened concerns that incapacity and disability benefit spending could rise by an additional £25 billion by 2030-31 if the increased rate of applications seen since the pandemic continues. The fiscal watchdog noted considerable uncertainty around these projections, which depend on government actions to manage claimants’ numbers.

As of the last financial year, 3.7 million individuals received incapacity benefits, while 6.9 million claimed disability benefits.

In efforts to combat benefit fraud, Healey announced plans to recruit 2,000 new staff members to identify Universal Credit abuse and promised stricter enforcement against claimants residing abroad for extended periods.